Guidelines Call for Chinese Pay to Rise With Inflation

Chinese workers could soon receive a pay raise. To combat rising prices for food, energy and other basic goods, the government mulls proposals to address income inequality. Guidelines for salary reform mostly target private companies, report a team of authors for the Economic Observer Online, "as most of the low pay and low growth rate in salaries occurred in the private sector, especially labor-intensive industries." As global prices continue to climb, the consumer price index in China dipped during the month of May. Economists typically warn that raising wages can reduce the number of jobs. Likewise, higher wages in China could prompt more companies to raise prices of goods or relocate to countries with lower wages, which could trigger a slowdown in spending by global consumers of Chinese products. The Chinese government must tread carefully, encouraging fair wages but also protecting and even creating jobs. If the government can sucessfully do this, both employees and the Chinese market will benefit. –YaleGlobal